Federal Government Expects to Get Most Auto Bailout Money Back

A new study from the General Accounting Office of the federal government concludes that the government should be able to get most of the money loaned to General Motors, Chrysler and other automobile companies back by selling off the public’s stake received in exchange for those loans. The Detroit Free Press reports:

President Barack Obama has said he wants to sell off the 60.1% stake in GM and the 9.9% stake in Chrysler owned by the federal government as soon as possible. The GAO report said Treasury officials overseeing those stakes expect GM and Chrysler’s profits “will be able to attract sufficient investor interest for Treasury to sell its equity.”

The U.S. government has poured $81 billion rescuing GM, Chrysler, finance company GMAC and suppliers. Steven Rattner, the former head of Obama’s auto industry task force, has said the administration should recoup most of the money spent on the automakers.

This will require both companies to return to profitability and reenter the stock markets with an Initial Public Offering. After that point, the government can begin to slowly sell off its stake to private investors.